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CHICAGO - Market research firm Information Resources, Inc. last week published a new report to serve as a guidebook for retailers looking to boost the performance of their private label offerings.
The study, "Private Label Report: Understanding Emerging Trends and Key Success Factors in Private Label," takes a look at consumer attitudes toward private label products today, and provides tools to help retailers develop an action plan to optimize private label performance.
"Sales of private label products in the United States are nearly $50 billion per year and command a 16 percent share in total CPG, but there remains a huge business opportunity for retailers," said president of IRI Retail Solutions and Strategic Consulting Thom Blischok. "With this level of sales at stake, retailers need to develop a stronger understanding of emerging private label trends, consumer attitudes, and key opportunities.
He added: "Retailers are evolving their private label focus from an item augmentation/differentiation strategy to more of a consumer-centric strategy, so that private label becomes a valued long-term innovation driven staple in the home. Having only manufacturer-focused insights is no longer enough. 'The IRI Private Label Report' incorporates current viewpoints from consumers, retailers, and both private label and branded manufacturers, so that retailers can truly gain a deep understanding of how to succeed with private label."
The IRI report provides perspective from retailers and manufacturers into what is working and what is not working within private label innovation, pricing, merchandising and promotions. Its findings are based on an analysis of a new 2006 custom consumer on-line survey of nearly 700 private label shoppers, trade interviews with retail and manufacturing executives, as well as data from the IRI Consumer Network household panel and InfoScan retail tracking service.
Following are some of these findings:
- Private label is positioned to grow in both healthy and struggling economies. A high propensity to buy private label among younger households bodes well for future private label growth.
- Given that grocers are beginning to scale back center store square footage, the growing presence of private label will increase the likelihood that second- and third-tier national and regional brands will lose shelf space and SKUs.
- Branded manufacturers believe that retailers have successfully "closed the gap" with their private label brands in terms of product quality and innovation in many key categories. Manufacturers are focusing their resources to determine how to create "space" between their brands and private label in the minds of consumers.
A comprehensive action plan is also included with the report, so that retailers can identify and capitalize on private label opportunities within their own operation using the IRI process. The methodology is designed to help retailers value the size of their private label opportunity, utilize private label as a means of competitive differentiation, revitalize the store center, and improve margin and performance.
Click here to see the IRI study